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Washington, D.C.—Another in a series of reports by the Treasury Inspector General for Tax Administration (TIGTA) underscores continuing and significant problems with use by the Internal Revenue Service (IRS) of private debt collectors, the leader of the union representing IRS employees said today.

“TIGTA’s most recent report, dealing with contractor and IRS implementation of procedures covering the private collection of federal taxes, highlights serious issues with the taxpayer complaint and concern process,” said President Colleen M. Kelley of the National Treasury Employees Union (NTEU).

“The upshot,” she added, “is that the true number of consumer complaints over this misguided program likely is grossly understated.” Kelley has been leading the fight to end the controversial IRS program.

One of the most serious concerns raised in the TIGTA report, which covers the period from April 2007 through February 2008, deals with the validity of customer service survey data provided by the private collectors.

IRS surveys of taxpayers dealing with the agency’s own customer service employees generate participation rates of between 40 and 42 percent; TIGTA, on the other hand, said in this instance, contractor surveys of customer satisfaction shows participation rates of only 14 percent—about one-third the rate of surveys conducted by the IRS.

The surveys are flawed, said the report, because “the survey selection process detracts from the credibility of the survey results. This occurs because the contractors’ representatives who conduct the collection calls are also responsible for offering the survey, which allows the potential for discretion or discouragement in the selection process (i.e., biased results).”

Another serious issue, TIGTA said, is the continuing discomfort taxpayers are showing over sharing their confidential information with private debt collectors. “That makes it clear that taxpayers would much rather deal with trained and accountable IRS employees,” said President Kelley. “In these days of rampant identity theft, taxpayers would much rather deal with an IRS employee.”

Separately, the NTEU leader noted that even after two years, the IRS has yet to complete a cost-effectiveness study to determine the program’s impact on the collection of taxes. As a result, she said, “the IRS can’t begin to say with any certainty if the program is performing well—or even as intended.”

The TITGA report noted that, “This review did not address whether the Program has been successful or whether the policy to use PCAs is appropriate.” The review focused only on compliance with administrative procedures.

One way to measure the program’s performance, Kelley said, is by the amount of revenue collected by the private contractors; that sum continues to be only a fraction of the IRS’s initial estimates. When start-up costs of $71 million are considered, the IRS program resulted in a net loss of $50 million in its first year of operation. This small return has forced the agency to revise the break-even point for the program to the year 2010—at the earliest.

“The bottom line is who does the work more cost effectively?” said Kelley. “According to IRS numbers, IRS employees bring in $13 for every dollar spent, whereas private debt collectors bring in $3 for every dollar spent. It doesn’t take a TIGTA report to figure that out.”

There also is growing bipartisan congressional opposition to continuing the IRS use of private tax collectors—and, among others, the IRS’s own National Taxpayer Advocate repeatedly has called for an end to the program. Additionally, public advocacy groups oppose the program including Consumer Federation of America; NAACP; National Active and Retired Federal Employees Association; National Consumer Law Center; National Consumers League; Citizens for Tax Justice; OMB Watch, AFSCME, National Council of La Raza; and the U.S. Public Interest Research Group.